Alphabet CEO Sundar Pichai believes Google is well-positioned for the era of generative AI. The company is experiencing growth in cloud and AI applications and plans to further increase its investments.
Alphabet, Google's parent company, reported positive quarterly numbers related to AI, similar to Microsoft.
Google Cloud revenue, which drives the company's AI business, grew 28% year over year to $9.57 billion in the first quarter of 2024, supported by demand for generative AI. Google Cloud operating income increased from $191 million to $900 million.
Google offers organizations access to its AI models, such as the multimodal Gemini Pro 1.5 and the image AI Imagen 2.0, as well as models from numerous other providers and open-source models.
Pichai claims AI leadership
On the call, Alphabet CEO Sundar Pichai emphasized Google's claim to AI leadership, having transformed itself into an "AI First" company as early as 2016. More than 60 percent of Gen AI startups and nearly 90 percent of Gen AI unicorns are now Google Cloud customers, Pichai said.
Recently, Google moved the teams that develop AI models under the umbrella of Google DeepMind to simplify development and create a single point of contact for product teams building generative AI applications with those models. The company is also working on a long-term reorganization of its cost structure that will result in an improved operating margin, Pichai said.
In addition to the cloud, Pichai sees Google's advertising business and Gemini subscriptions as other revenue drivers for Google's AI services. Google services revenue grew 14 percent to $70 billion in the first quarter, according to Alphabet CBO Philipp Schindler.
Google continues to experiment with AI search
Pichai sees a disruption in search similar to the transition to web, mobile, and voice. Generative AI expands what search can do and leads to new growth, he said.
Google has been experimenting with the Search Generative Experience (SGE) for nearly a year and is now introducing AI overviews on the main search results page. According to Pichai, generative AI search increases the number of search queries and user satisfaction.
"We've already served billions of queries with our generative AI features. It’s enabling people to access new information, to ask questions in new ways, and to ask more complex questions," said Pichai. Google is currently testing SGE in selected countries with some test users.
According to Pichai, Google is also prioritizing traffic to websites. However, as in the past, the Alphabet CEO was not specific about how he plans to achieve this, as it goes against the nature of Google's generative AI search offering.
Google's chatbot competitors also fail to answer the question of how the content ecosystem on the web is supposed to work if chatbot operators deliver website operators' content directly to the users of their chatbots, causing the monetization of websites to collapse.
